Sunday, June 26, 2005

Coda: Government Has Its Place

(Post 5 of 5)

The Crux: The Place of Government

“Memory is an intriguing thing; sometimes it represents lost dreams.” The once red-hot Zhongguancun “Electronics Avenue” today has become a wide road lined with bunches of buildings. The truly embarrassing thing is that its quality has not changed: it is still an electronics market. Zhongguancun has not undergone the intrinsic transformation from a large market to China’s Silicon Valley.

The government has already done much to subsidize and support Zhongguancun. People should not longer rebuke it as lacking. But looking at the current situation, the pace of the government and the pace of enterprise development need to be readjusted.

Zhang Zhongning said that at the beginning of the 80s, a group of technology savvy entrepreneurs drove the development of Zhongguancun, while the government’s position was to provide assistance and service. With the construction of the Science & Technology Zone, the government became a principal actor in encouraging economic development. Different districts and different government departments made increasing GDP their main goal. In this way, they began to rely heavily on real estate industry for development.

In Zhongguancun, real estate should not be allowed to transform science & technology-Zhongguancun into property-Zhongguancun. Only in this way will the advantages and long-term economic development of Zhongguancun be possible. Quick successes and instant benefits are not the development rules for a knowledge economy.

Again, in the construction of Zhongguancun’s finance system: assistant director of the Institute of Finance Research at the State Council Development Research Center, Zhang Chenghui, said, “Today, Zhongguancun enterprises are encountering financial difficulties. This shows that the government has not taken responsibility for many aspects of finance for SMEs. If finance is difficult for SMEs, this is not a problem that SMEs can solve and so the government needs to provide procedures for special support.”

Zhang Chenghui thinks that the government should put a lot of effort into this, for example providing credit services for SMEs, and providing loan and executive services. The government can form a non-profit intermediary to do this.

Zhang Zhongning says that the current Zhongguancun Science & Technology Park is managed by Chinese Academy of Sciences (CAS), institutes of higher education (Peking University (PKU) and Tsinghua University, who represent a group of universities), the Beijing city government, and the Haidian and Chaoyang district governments. Among these multiple managers, various governments and government departments need to take advantage of different things to survive. The relationships between these various advantages have not been coordinated. For example, the Beijing city and Haidian district governments built a Haidian Western District, while Tsinghua and PKU each have their own science parks. This creates a total new area of several million square meters. CAS is building an Eastern District. In actuality, this is all being done by real estate developers and creating a very serious low-level reconstruction.

“If we have a problem, should we go to the Bureau of Science & Technology, the Beijing city government, the Zhongguancun Management Committee, the Haidian district government or the Chaoyang district government? This is a very complicated management system,” said an IT boss in Zhongguancun.

There are many other problems in Zhongguancun. The solutions to these problems are even more numerous. Put simply, the government has gone from a leading position to the wrong position and back to its original position. These shifts have brought about major changes in Zhongguancun.

Maybe we have placed too much hope in Zhongguancun. Or maybe we are overanxious. But regardless, as long as Zhongguancun’s direction has not become skewed then giving Zhongguancun more time will only bring about a better future. (Topic selection: reporter Ge Fangxin)

Copyright: Global Business & Finance Magazine All Rights Reserved Unauthorized Reproduction Prohibited

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